Regulators and congressional leaders have identified similarities between the
lending practices that led to the subprime mortgage crisis and an escalating default
rate in the burgeoning level of student loan debt. Rather than wait for a student
loan crisis, they appear poised to act to prevent one by various means, including by
the reform of student loan servicing practices. To this end, in 2012 the Consumer
Financial Protection Bureau released two major reports aimed at curbing purported
violations of law. In addition, in March, partly to address the complaints of student
loan debtors, the CFPB announced its intention to supervise and examine the larger
non-bank education loan servicers.
This commentary reviews the 2012 CFPB student loan ombudsman’s annual report,
the CFPB’s December 2012 release of examination procedures for student lenders
and the proposed regulation on the supervision of non-bank student loan servicers.
Taken together, these initiatives leave no doubt that education lending and servicing
and the regulation of education lenders and servicers are a top priority for the CFPB
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